Author: Wu Rong (original)
No one will deny the level of fierce competition in the packaged drinking water market this year.
A few days ago, according to a notice from China Resources Beverage to terminal stores obtained from the market, the giant, which is famous for C'estbon, decided to hold an event called "Unboxing Gifts" in multiple regions from May 10 to June 10. Specifically, one carton of CR Beverage's products can be exchanged for two bottles of 555ml Cestbon water, and one standard film can be exchanged for two bottles of 555ml Cestbon water.
This encouragement of unpacking is thought to be primarily aimed at speeding up the distribution of drinking water products.
It is worth noting that before this event in Cestbon, Nongfu Spring also announced the launch of green bottled drinking purified water, with a price of 1.5 yuan for 550 ml. As a relatively traditional category, why is drinking water still a "battleground" for beverage giants, and to what extent can related actions help companies win the "water war"?
Let's take a look.
Accelerate the distribution of goods
Let's take a look at China Resources Beverage's latest "unboxing courtesy" pin pulling action.
According to the notice written on the letterhead to "Dear Boss/Boss's Lady", the company said that it is scheduled to carry out the "unpacking and courtesy" recycling carton activity in May. The company emphasized, "There is a split and a redemption, more dismantling and more redemption, the opportunity is not to be lost, come and do it". The notice also includes family photos of its products.
In this regard, a distributor in the northern region of China Resources Beverage told Xiaoshidai that in addition to the literal environmental significance, the intention of the activity is actually to encourage unpacking.
"Terminal stores such as commissaries, convenience stores, etc. are willing to participate in the event, a carton to sell waste can not be exchanged for much money, but to participate in the event can be exchanged for 2 bottles of water, 2 bottles of water are worth 4 yuan, the amount of cartons is considerable, which also means that the terminal store can enjoy a good concession." He said that according to the amount of C'estbon water exchanged by the terminal carton to the distributors, the distributors will calculate the expenses with China Resources Beverage Company, and after the verification, the company chooses to buy the goods or pay the dealers.
In fact, this is not the first time that China Resources Beverage's "unboxing gifts" has been opened, and similar activities have been seen in various regions across the country in the past few years. The above-mentioned distributor said that the main reason why the campaign is usually launched in May and June is that "generally speaking, the peak season for water drinks is from May to September, and this is to try to let the terminal stores unpack as much as possible, and the ultimate goal is to promote sales." ”
For FMCG companies, especially beverage companies, terminal shelves are their sales base, and if they pay more attention to terminals and start sales activities, they can help brands speed up the distribution of goods and further occupy market share.
However, behind the increase in the layout of dynamic sales, this year's activities have attracted much attention. First of all, China Resources Beverage has just handed over the Hong Kong stock prospectus. The above-mentioned dealers said that before June this year, the company had communicated with agents in various regions, and in the first half of this year, they must find a way to complete the task.
Secondly, the packaged drinking water industry is facing an intensification of the game. According to the data of the market research company Instant Win, in the packaged water category in the Chinese market in 2023, only Nongfu Spring, Jingtian and Master Kong Holdings have increased their market share year-on-year, while the market share of Cestbon, Wahaha, Coca-Cola, Jinmailang, and Uni-President Enterprise China has declined.
"The current situation is still a situation of oversupply, and the price war for water is very strong." The above-mentioned dealers said that among them, 2 yuan bottled water, as the mainstream price range, is the most tragic in the price war. Under the intensification of competition, it is necessary to accelerate the distribution of goods, and dealers are also under pressure.
Today, a bottled water brand distributor told Xiaoshidai that there is inventory pressure in the current peak season, "This batch of goods has been sent out, and the company's new goods are on the way, that is, the inventory pressure is coming soon, and the warehouse is almost full recently." At the same time, dealers also have to bear the pressure of funds, "the company will ask for half a year rebate, which is not a small number."
Soldiers must fight
Although tea drinks and electrolyte water are popular, with the escalation of market competition, people can't help but wonder why the relatively traditional category of bottled water is still worth the scramble of "big manufacturers"?
Today, a distributor of packaged water such as bottled water in Guangzhou analyzed that drinking water is a necessity in daily life, and it is a rigid need, which determines that its demand is relatively stable, and at the same time, with the improvement of consumer health awareness, it is regarded as a healthier choice compared to other sugary or carbonated drinks.
At present, the market size of packaged drinking water is not small, and it is also considered to have potential in the future. According to the CIC Consulting report cited in the aforementioned prospectus of China Resources Beverage, the market size of China's ready-to-drink soft drinks in terms of retail sales will reach 909.2 billion yuan in 2023, of which packaged drinking water is the largest category in terms of retail sales, with a market size of 215 billion yuan in 2023 and an expected compound annual growth rate of 7.9% from 2023 to 2028, which is the fastest growing category among all ready-to-drink soft drink categories.
"Bottled water is generally a fixed brand, and if the brand has built up a high level of consumer loyalty or trust, consumers are often more willing to choose a familiar brand and keep buying it at the same or similar price." The dealer said that brands are still willing to invest in it in order to continue to consolidate their dominant position.
Nongfu Spring Pure Water (profile picture)
Of course, the profits of bottled water products are still quite substantial.
According to Nongfu Spring's 2023 financial report, last year's revenue exceeded 40 billion yuan for the first time, of which the revenue of packaged drinking water products exceeded 20 billion yuan for the first time, an increase of 11% over 2022; Including the contribution of packaged drinking water, Nongfu Spring's gross profit margin reached 59.5% for the year.
The prospectus of China Resources Beverage also shows that the revenue of packaged drinking water products will reach 12.447 billion yuan in 2023, accounting for 92.1% of the company's total revenue; In the past three years, the gross profit margin of CR Beverage has been around 43%.
This is probably the reason why brands continue to invest in drinking water products and channels, and see this category as an important battleground.
"Water replacement" is coming
Interestingly, in addition to the "water fight", bottled water producers also have to deal with the consumption trend of "water substitution" in order to grow. Due to the price involution caused by the influx of capital, these "water replacement" products are becoming more and more accessible to the people.
NielsenIQ data shows that in 2023, ready-to-drink tea will surpass carbonated beverages to occupy the largest market share and become the category with the largest sales volume in the beverage industry. Among them, the volume of sugar-free tea has doubled. This has also attracted many brands, large and small, to enter the game.
One of the selling points of the "rise" of this category is that sugar-free tea can be used as a "water substitute": it not only meets the needs of consumers to "quench their thirst" in more scenarios, but also has attributes such as "health and light burden".
In the publicity of many brands, the concept of "water replacement" can also be seen.
In April last year, Master Kong launched pure extract zero sugar alpine oolong tea, proposing the concept of "water replacement", which means that this drink is sweet and quenches thirst and can be used as a substitute for drinking water. In December 2023, a similar statement was mentioned at the press conference of the new brand "Tea and Water Talk" of Chaxiaokai.
In addition, at the end of last year, Yuanqi Forest also said at the dealer conference that as water substitute drinks gradually become daily, consumers have begun to pay more and more attention to cost performance for water substitute drinks, and the company will upgrade and focus on the promotion of its water substitute drinks such as sugar-free tea and other products.
One of the above-mentioned bottled water brand distributors told Xiaoshidai that the distributor said that the information obtained through visiting terminal stores was that he personally felt that Nongfu Spring was now spending a lot of time and energy on the beverage business, including sugar-free tea.
"In this third-tier city where I live, generally speaking, the company has a display fee rebate for dealers. However, this year, I heard that the distributor bought the beverage product, and the company will return the packaged drinking water as a display fee, or it can be understood as a 'giveaway'. He said.
According to the data, Nongfu Spring will use products such as Oriental Leaves in 2023 to account for 52.5% of beverage product revenue, and the growth rate of this business segment will reach 49.6%, while the growth rate of packaged water will only be 10.9%.
In comparison, in 2023, the sales of beverage categories other than drinking water will be 1.07 billion yuan, accounting for less than 8% of the overall revenue. Among them, the retail sales of five beverage product brands of CR Beverage (i.e., Zhiben Qingrun, Honey Water Series, Holiday Series, Fire Coffee and Afternoon Milk Tea) exceeded RMB100 million.
"The popularity of sugar-free tea must have had a certain impact on packaged drinking water, it has a taste and is healthy, and young people are willing to choose it for an extra 1 yuan." The distributor said he himself was looking at an opportunity to represent a well-known sugar-free tea brand.